Archive for September, 2012

The NFL teaches everyone a valuable lesson about labor relations

September 25, 2012

Let me begin my making my biases clear: my father was a union man, his father was a union man, and the only thing I don’t like about my chosen profession is that I won’t be able to be a union man. I think that unions play a vital role in correcting the economic inefficiencies that arise from unequal bargaining power between employers and employees. No matter how much value you can provide to a business, whether you’re scrubbing the toilets, welding the widgets, building the building, or fixing the printers, a business will always be able to undercut that value by finding someone desperate enough to do the same job, contributing the same value, for less pay. That is why nations impose laws like minimum wages, collective action protections, and equal pay statutes: because they hurt the market.

But what is this doing on a skeptical blog, you ask? Because I, as a skeptic, am a dedicated foe of pseudoscience, and I think that there is a lot of economic pseudoscience out there. A lot. And there are few economic models more pseudoscientific than those followed by the Scott Walkers and Paul Ryans of the world. Those are the models that say that unions are bad for the economy, and by extension bad for America.

The labor issue gripping America’s imagination most vividly today is that of the NFL referee lockout, coming right on the heels of the Chicago teachers’ union strike, so we’ll start there. Now, a lockout and a strike are significantly different: in a lockout is the employers enforcing a work stoppage, usually used as a preventative measure against a strike during labor negotiations, but in a strike, the workers themselves have decided (and at least one federal judge and the National Labor Relations Board agree) that the workers have no way to get their voices heard at the negotiating table other than to strike.

That is one defining feature of work stoppages that people sometimes forget: it isn’t just up to the workers to call a strike. For large strikes with the potential to paralyze local economies, as the Chicago teacher strike has, workers do not have the unilateral power to engage in a strike. In part because of the size of the strike, the critical importance of the industry in question, and the fact that the workers are public employees, they had to receive a judge’s approval, and the approval of the National Labor Relations Board, to strike. The Chicago teachers had to go through literally years of abuse at the hands of their managers before a judge would authorize the strike.

The National Labor Relations Board is, at least hypothetically, a five-member body that adjudicates labor disputes at their preliminary stages. Their general counsel investigates complaints and has virtually unilateral control over whose complaints get heard and whose do not. The Board itself makes calls on how to fix the problems described in the complaints, but both complainants and those accused of unfair labor practices (both workers and employers can commit unfair labor practices) have broad rights to appeal.

While the NFL and the Chicago labor disputes are different in the nature of the action taken by workers (striking and being locked out), their complaints are fundamentally the same: they feel that they do not have the kind of bargaining power that they need to secure fair working conditions and fair pay. The NFL’s lockout strategy has permitted them to hire strikebreakers or “scabs,” workers who will work while the aggrieved professionals wait for a court to force their employers to hear their demands. And the American public is very, very upset at the performance quality of the scabs.

That is one of the few advantages that workers have in labor disputes: their expertise. Striking workers are the ones who have worked at a business long enough to develop skills, and while the skill variance between workers and scabs is sometimes very low (a janitor, by and large, is a janitor), it is sometimes very high (not all referees are created equal). In a perfectly-functioning market, every employee would come with a little experience bar floating over their heads like in a video game that would broadcast the fair market value of their labor to any employer, who would mechanically pay exactly that amount for their services.

But how do you go about characterizing the fair market value of a referee’s work? The pseudoscientific model says: the fair market value of that labor is the lowest amount somebody would do the job for. And we’re seeing just how effective that model is at describing the value of an NFL referee. The scabs will work for less than the locked-out referees are asking, and so supposedly they should have as much value as the refs had before the lockout – but they don’t. The veritable uproar American football fans are expressing over a slew of bad calls shows that, in very real terms, a scab referee is giving less bang for his buck than an experienced referee.

The pseudoscientific model of labor relations makes this mistake because it makes the childish mistake that workers and employers negotiate fair and square over working conditions, that the worker and the boss are equal partners at the bargaining table and so if a worker doesn’t like her pay scale, she should demand a raise or find a job that will pay her more. This is the economic model that America followed in what we today call the Guilded Age, the late 19th- to early 20th-century period where a textile worker might make a million dollars worth of textiles over the course of her working life but end up making $50,000 for herself.

Read that again: a textile worker might have a lifetime output of one million dollars in widgets, and take home $50,000 over that lifetime. On what planet is this an efficient market that rewards hard work according to its merit? Scott Walker’s planet. Paul Ryan’s planet. It’s the same planet where minimum wage laws are unnecessary because labor is as valuable as the boss will pay for it! It’s the same planet where the American poverty rate cracked 25%, where the income gap between high-income and low-income earners hovered around 1,000%, where the market was free for employers and tightly controlled from above for workers.

The simple fact is that, from the original position, workers are at a disadvantage. There will always be more people looking for jobs than there are jobs, and so everybody will want to work for less than everybody else. This drives down wages, which puts less money in the pockets of customers, which puts less money in the pockets of businesses, which causes businesses to shed workers, who will work for less than everybody else because they need work, which drives down wages, which puts less money in the pockets of customers…

Think of it as a complicated iteration of the prisoner’s dilemma. It is to every business’s net advantage to pay every worker higher wages, because that way every customer has more money to spend. But it is also beneficial to the individual business to screw its own employees out of fair wages because that saves it money and lets it be more competitive by driving down the prices of its goods – but then other businesses have to follow suit or perish, so everyone else follows suit, and prices fall almost as fast as the wages, and in the end, everybody loses.

The trade-off that we are often told that we have to accept is that fairer labor laws will translate into a weaker economy. But that simply isn’t true. Minimum wage laws are fair labor laws, and they translate into a stronger economy (according to a group with very moderate overall opinions on minimum wages). Labor organization protections are fair labor laws, and they translate into a stronger economy for the same reason: they maintain market efficiency. Pure and simple.

That’s the other version of the premise we’re all told to accept: any government protection of workers is a de facto market inefficiency. But that just isn’t so: markets work best when they reward by outputs according to inputs. That is why a worker who makes a million dollars worth of textiles today wouldn’t make nearly a million dollars in a lifetime of work, since of course the employer takes a cut, the business takes a cut, fringe benefits take a cut, taxes take a cut, and so on, but they’ll be making a hell of a lot more than the lowest possible amount the employer can get away with.

In the efficient market, the government protects employees from having the fair market value of their labor artificially depreciated by contingent disparities between number of workers and number of jobs. Our minimum wage is far from high enough, the NLRB is far from protectionist enough, and labor protections are far from extensive enough, but they do a better job of modeling a truly free negotiation between workers and bosses than the pseudoscientific economics which says that, left to their own devices, bosses will make for a better market by themselves. Because I just do not think that what makes a market “free” is what makes a market free for the people who already have all of the capital to invest. A market is “free” when fair value is paid to everyone for everyone‘swork.

Myself, I am an entrepreneur. My private practice is service-oriented and we do not have any employees, we only have partners. My partners and I had the luxury of being able to sit down and freely negotiate the terms of our partnership agreement, which dictates virtually every aspect of the economics of our business and of our relationship with each other. Any of us could freely leave, refuse the terms, and end the business. But with regular employees, the business doesn’t end when it considers your own needs – it moves on to the next worker, who hopefully will work for less. The partnership model is the ideal model, since everybody agrees on the terms or the business never happens. In the employer-employee model, the employee gets by with what the employer allows. The second model is economic pseudoscience, one that we try to correct with labor and wage protections.


Routine follow-up to Supreme Court’s decision on Arizona’s “papers” provision hailed as ‘major victory’ for anti-immigration groups

September 7, 2012

It is something of a trope among those with an interest in a specialized field that the “mass media” or the public-at-large generally does an atrocious job of translating subtle points about that field into laymen language. I actually don’t think this is true about the law: I think that the media usually does a pretty good job of getting the basic points of legal disputes out to the public. Even with politically-charged legal disputes, such as the Obama healthcare ruling earlier this year, with all of its complicated ins and outs, I think that the reporting on it did a pretty good job of explaining to the public what the difference is between the commerce clause and the taxation power.

That is why I am so baffled whenever big, lets not call them mistakes, but maybe rather glaring omissions, occur. Such is the case with the recent Arizona “ruling” that “upholds” the key provision of Arizona’s immigration overhaul – it is being hailed as a victory for advocates of more restrictive immigration policy, but in my opinion it is less than a tempest in a teacup. District Judge Susan R. Bolton’s ruling did not really “uphold” anything (unsurprising, since she is the very same judge who’s striking-down of that provision led to the Supreme Court case that tossed out most of the law but kept this very provision intact for now), it just reiterated a pretty uncontroversial point.

That point is that, when the Supreme Court says something, you do it.

When the Supreme Court ruled on the Arizona immigration law, advocates for immigrants and their families were disappointed by the perception that the “show-me-your-papers” provision, under which Arizona officials are entitled to demand proof of citizenship during criminal stops, had been “upheld.” But it wasn’t exactly upheld: it was rather put in the category of “let’s just let this one play out, and we’ll see how the cases go once the law is in effect.”

This all starts with the question of how it is exactly that laws are found to be racially discriminatory or not. Over the last few decades, courts have consistently applied a multi-tiered series of tests that applies anti-discrimination policy to state and federal laws differently depending on the text of those laws:

  • If a law is facially discriminatory (for example, segregated schools), the government has an extremely high burden to meet: the law is presumptively unconstitutional barring a showing that the law’s discrimination achieves a very specific legitimate state interest and that its discriminatory component is more or less essential and unavoidable to achieve that interest. This test cuts against both laws discriminatory against racial minorities, and laws that favor historically disadvantaged groups. Affirmative action programs, for example, must have extremely precise, express limitations in how long they last and what quotas or statistical balances they are trying to achieve, otherwise they are unconstitutional. Such policies may not be blanket or unqualified, though race may be used as one of many “plus factors” for admission to higher education, for example.
  • If the law is not facially discriminatory, meaning that its text does not expressly designate a certain race or other protected class for unequal treatment with other such groups, then the law must have a discriminatory effect, either in how consistently it is applied (in which case a judge can keep the law and just order law enforcement to enforce it more fairly) or in its ultimate unforeseen consequences (in which case the judge will ask the legislature to rewrite the law to get at the same state interest without necessitating the unforeseen discriminatory effects).
  • If the law doesn’t serve a valid government interest, than any discrimination either on its face or in its application invalidates it.

Since the Arizona immigration statute doesn’t single out any racial group, ethnicity, or national origin in express terms, it isn’t in the first category. And since probably any court in America would find that a coherent immigration policy is a valid government interest, it doesn’t belong in the third. So we’re left with the second.

The Supreme Court followed the same line of reasoning. The second category, you’ll note, requires discriminatory effects from the application of the law. Since the law had not yet gone into effect as of the Supreme Court’s decision, they did not rule on the question of its constitutionality. That does not mean that the Supreme Court upheld the law writ large. It means that the law wasn’t presumptively unconstitutional, as the first category is, and so it could only be found to be unconstitutional in its effects – and since the law hadn’t taken effect, there were no effects to investigate!

Judge Bolton did her job perfectly – she mimicked the Court’s reasoning to a T, which is sensible given that the Court’s ruling in that case was aimed at her own ruling. Like the Supreme Court, she did not declare that, in the face of discriminatory effects, the law stands up to scrutiny anyway. Rather, she just said that we’re still waiting for the evidence. The jury’s still out, as it were.

Advocacy groups for those unfairly targeted by discrimination laws see this kind of ruling as the opportunity for what’s called a ‘test case.’ Probably what will happen is that lawyers for immigration advocacy groups will be watching the Arizona police blotter carefully for arrests under the Arizona “papers” provision once it goes into effect, then swoop in to take those cases because then the courts will have to decide whether or not the law passes the standard of scrutiny applied to the second category above.

Until then, though, nothing has been upheld, nothing decided or tossed. We are in the wait-and-see session of this law. And as with the courts, you’ll have to wait to hear this skeptical jurist’s opinion until the cases start coming in.

BP tries a Hail Mary pass around claims of ‘gross negligence’

September 5, 2012

BP plc, formerly British Petroleum, nee Anglo-Persian Oil Company, may be coming to the end of the long, rocky road toward ultimate settlement for damages relating to the 2010 Deepwater Horizon explosion and blowout. The proffered $7.8 billion settlement to the various parties to an enormous class-action suit currently meandering its way through the Eastern District Court of Louisiana must, like most class action settlements, be approved by a judge before the money actually goes out and the claims are settled. Misleading news headlines report that the Department of Justice is formally accusing BP of “gross negligence” in a new brief filed this week, but when you read the DOJ’s brief and come to understand the procedural issues at stake in the new brief, you’ll see that it’s actually BP that is making an accusation to which the DOJ is responding. Namely, BP’s accusation is that it was not grossly negligent in handling the events leading up to and following the Deepwater Horizon disaster.

Firstly, the Department of Justice is not opposed to the $7.8 settlement to quiet the plaintiffs in the class-action suit; indeed, while the settlement was not strictly made between BP and the DOJ, the DOJ maintained a close eye on the negotiations and had many opportunities to step in and press-gang plaintiffs into pursuing stronger settlement terms or even a trial, none of which it took. They have taken no steps to intervene in the settlement, nor should they, since the settlement represents a good-faith negotiation between attorneys’ plaintiffs and the defendants.

Secondly, the DOJ’s memorandum filed this week is actually a response to a recently-filed BP memorandum, not a motion in and of itself. BP’s recent memorandum calls for the judge overseeing the settlement order to make a finding that BP was not grossly negligent in the Deepwater Horizon disaster. This is the ‘Hail Mary’ pass to which the title of this post refers. A little procedural background, first.

As I’ve said, a judge must approve whatever settlement ultimately emerges in many class-action settlements. That is because the procedural law of United States courts treats class-action lawsuits as being fundamentally different from individual or small group lawsuits. And rightfully so: class-action lawsuits can involve thousands or tens of thousands of parties, each of whom individually has a completely different set of facts that bring them to court. For example, in the instant case, both an oyster fisherman whose business was harmed by environmental damage to the Gulf and the owner of a tourist beach resort whose shores were damaged by tarballs washing up on her shore might have claims against BP, but those two parties have radically different harms to themselves, with claims as factually different from each other as the sea is from the shore. But both parties’ grievances clearly stem from the same cause, namely the Deepwater Horizon explosion (and potentially the gross negligence that led to it; we’re getting there), so it’s just more efficient to glue their cases together and press them both against BP at the same time.

When lots and lots of seemingly different cases start getting glued together into a single action, it becomes time to give serious thought to a class-action suit. Unlike a regular lawsuit, where one party files their complaint, the other party responds, and battle begins under the neutral eye of a court, a class-action lawsuit requires certain positive interventions by the court in order to be allowed to proceed. For example, the court must certify the class, meaning that the court determines that the current action adequately includes most or all of the potential parties to the suit, since the whole point of the class-action (efficiency) is lost if straggler plaintiffs keep filing their own cases after the class-action ends. The court wants to minimize the number of stragglers. But the court also doesn’t want to force people into the class-action suit who don’t want to be there (maybe they don’t trust the lawyers handling the case, or maybe they just think that they’re in a unique position to get a better reward than they could through the class-action), so the court must make sure that an adequate opt-out procedure is in place for those people that want to be those straggler plaintiffs.

And the kind of intervention the court is faced with now is reaching into the deal reached between the parties and approving the settlement. This is the step that the BP settlement has reached, and it is from this position that the long arm of the BP legal team is reaching back to hurl its Hail Mary. In approving the settlement offer, the court must issue a written decision, and the BP memorandum to which the DOJ is responding is urging the Eastern District Court of Louisiana, the current home of the class-action, to include in its approval document the assertion that BP was not “grossly negligent” in its operation of the Deepwater Horizon spill.

Now, why does this even matter? Isn’t the case coming to a close anyway? Isn’t that the whole point of BP’s settlement – to end the lawsuits? Not quite. The settlement BP has reached is purely on the damage caused by the explosion of the rig. The current case involves no accusations whatsoever of misconduct amounting to gross negligence on BP’s part; the plaintiffs are essentially only alleging that “BP hurt me, and I want them to fix me.” What BP wants is language in a court document somewhere, anywhere, saying that “BP was not grossly negligent.” That’s because it is in subsequent cases that allegations of gross negligence will be made, probably when larger parties and state actors like the EPA and the DOJ itself, with more far-reaching investigatory powers, will have better access to the information needed to build a case that BP failed to exercise “ordinary care” in following safety regulations and its own internal safety procedures.

These future efforts are distinct from either the present class-action case or the stragglers from it, since the present class action is addressed merely to the fact that BP equipment harmed a lot of people and did a lot of damage to the economy and environment of the Gulf of Mexico. The case is built just on that fact alone, not on findings about the actual behavior or misbehavior by BP officials.

BP’s Hail Mary pass is to preempt all of these future actions and to close off any discussion of its ultimate negligence or even gross negligence by having the Louisiana court find now, in approving the nearly $8 billion settlement at hand, that BP did not act grossly negligent. The DOJ correctly advises the court that since such allegations are not a meaningful component of the present case, it would be inappropriate for the court to go out of its way to make such a finding, a finding which civil procedure requires to be done in a separate hearing or set of hearings, possibly even in a completely separate case or class-action. Essentially, BP wants a favorable ruling today on a case that starts tomorrow, opportunistically manipulating the good-faith settlement process into getting language from a judge foreclosing on future efforts to rectify harms that might have been caused by sloppiness, stupidity, or even maliciousness in BP’s quest for cheap domestic oil as fast and as abundantly as possible.

And thirdly, BP is making as a backup claim that its several co-defendants (the various subsidiaries and contractors responsible for building and installing the actual Deepwater Horizon rig) managed the rig in a way that so attenuated BP’s management of Deepwater Horizon that BP isn’t even responsible for what happened in the first place, regardless of any negligence on its part. In short, BP wants the court to make, again without any evidence or formal hearings on a point that isn’t being pressed by either side in the actual settlement negotiations, that BP was so distantly involved in the Deepwater Horizon disaster that its own care or negligence aren’t even candidate questions for future lawsuits. In shorter, BP wants to throw its business partners under the bus to save its own neck.

This disingenuous claim invokes a nuanced understanding of agency law, and questions about whether BP’s subsidiaries and contractors were ever “agents” of BP (in which case BP would be bound by their official acts in the ordinary course of business) or not. But the long and short of it is that, while the rig was working properly, BP was happy to draw enormous income from its thousands of barrels a day of oil production, but now that it actually comes time to take responsibility for the consequences of the rig, it wants to act like it was just watching the whole operation from a helicopter’s-eye view.

So as you read the news, remember these takeaways:

  • The Department of Justice is not now, and has never, formally accused BP of gross negligence.
  • The Department of Justice wants you to have the right to press BP for gross negligence in the future.
  • BP wants a court to rule, in complete absence of any evidence on the point in a case completely unrelated to the allegation, that BP showed proper care in its oversight of the greatest environmental catastrophe in human history.
  • BP wants to show other major energy companies that an end-run around the procedural rules of American courts is both easy and profitable.
  • BP wants to sacrifice its own business partners to protect itself from taking responsibility for its mistakes.

Creationism is dead. Long live creationism!

September 4, 2012

Bill Nye the Science Guy has somehow made headlines this week just by articulating the scientific consensus on the laughable hypothesis that the 6,000-year old Earth and all of the life on it was created in its present form by an invisible wizard in the sky. The tragicomic retorts coming from the creationist crowd, specifically the dunce-hatted Ken Ham, are not just scientifically inaccurate, they’re also contrary to the relentless barrage of legal precedent dealing with the teaching of nonsense in public schools. Here I will provide a primer on just why it is that creationism has lost virtually every legal battle it has ever fought. This primer will be brief, because the case against creationism is, at this point in the case law with the kinds of precedents that have been put in place over the last couple of decades, practically open and shut.

The National Center for Science Education, a think-tank and advocacy group dedicated to protecting standards of excellence in American science classrooms, has a helpful list of ten of the biggest cases in the field. The actual cases are fairly repetitive: laws against teaching evolution, laws targeting evolution for exaggerated criticism, and laws promoting the teaching of creationism share in a broad family of legal flaws. But the most interesting of the cases is the most recent on the list, the famous Kitzmiller v. Dover case, since it provides both a powerful summary of all of the past precedent against creationism, and most clearly articulates into precedent the relatively recent stricture that, legally speaking, creationism is not science.

This point may seem obvious to anyone with even a pedestrian understanding of science, but as a matter of law, it’s an essential part of the following chain of argumentation:

  1. A law must have a secular purpose, must not needlessly advance one religion or religious perspective over another, and it must not excessively entangle the government with religion. (The “Lemon Test,” a controversial but time-tested First Amendment rubric for matters of religion.)
  2. If a law targeting science education has no merits whatsoever for the advancement of science education, it has no secular purpose. (This was the Dover court’s contribution to precedent.)
  3. If a law targeting science education promotes a single interpretation of Christian theology to the exclusion of all other perspectives for no scientific reason, it needlessly advances one religion over another.
  4. If a law requires the government to define creationism and then install monitoring controls to make sure that teachers are teaching the “correct” kind of creationism, then the state is entangled deeply with religion since it must define and then enforce a “correct” interpretation of creationism.

All of this falls apart if creationism is found to be legally scientific. Assuming for argument’s sake that creationism is treated as good science, a law promoting its teaching would have the secular purpose of making science lessons just more scientific by including one more scientific factoid, namely creationism. The advancement of Christian creationism over all other religious hypotheses wouldn’t be needless, because the Christian version would be the only one to date found to be scientific. And the monitoring controls installed to enforce the teaching of creationism wouldn’t be “excessively” entangling because they would be of the same sort we have to use in any science standards, were creationism added to the canon of standard science.

That is why, in my estimation, the linchpin of the legal case against creationism is that creationism is unscientific. None of its religious implications are as Constitutionally troubling if it turns out that creationism is scientifically valid because teaching scientifically valid things in science class, regardless of their peripheral implications, is the core function of science classes.

But thanks to the Dover precedent, the nail is in the coffin: creationism has been beaten back in its every assault on standards for science education. So why does it persist? The reasons are almost certainly cynical politics: evangelical voters eat that stuff right up, and the voter gets what the voter wants. To that end, I’d like to advertise the following warning to every single school board in America considering revising its science standards down to the lowest common denominator:

Dear school board member, state senator, or school administrator planning to sneak creationism into a science classroom,

It has come to my attention that you are about to blunder your way into another major legal defeat for your medieval worldview. As a gesture of good faith, I would like to tell you what will happen if your bill gets passed:

  1. Your school system will become an international laughingstock overnight.
  2. You will get sued.
  3. You will flush away six figures fighting a legal battle, even if the insincere buffoons defending you promise to do it on a volunteer basis.
  4. You will lose.

I urge you to keep all these points in mind. I urge you to introspect deeply on how much you value your job, the jobs of the teachers you employ, and the academic and employment futures of the students who will be victims of your cruel imposition of nonsense.

Your pal,